Development of a private sector framework for ASEAN trade

Development of a private sector framework for ASEAN trade negotiations: Health care sector1

Tereso S. Tullao, Jr. & Michael Angelo A. Cortez2

De La Salle University, Manila 1. Introduction The economic integration of East and Southeast Asia has been an expressed goal of the ASEAN, Japan, China and South Korea. Economic integration in the East Asian region has been influenced by market driven forces as well as institutional drivers (Urata, 2006). The market-driven forces refer to the impact of economic of growth, globalization, improvements in information technology and increasing competition on the rapid expansion of trade, investments and flows of people across the region. It is estimated that intra-regional trade among countries in East and Southeast Asia has risen to over 50 percent of their global trade in 2004 compared to over 40 percent in 1990 (Urata, 2006) The growth in FDI has also been phenomenal. These can be attributed to rapid economic growth in the region. The movement of people through permanent or temporal migration has made the region closer economically.

There are also institutional factors that facilitated the expansion of trade, investment and flows of workers. These factors refer to the role of trade negotiations at multilateral, regional and bilateral levels. Trade in services, for example, has expanded to some extent due to increasing coverage and depth of liberalization as enumerated in the commitments of countries in the General Agreement of Trade in Services, (GATS) at the multilateral trade negotiations. At the regional level, the ASEAN Framework Agreement on Services (AFAS) has served as an institutional driving force in expanding trade in services. Countries, likewise, enter into bilateral preferential agreements to expand trade in services (Tullao & Cortez, 2006). Because the contributions of regional trading accords like the AFTA and the AFAS have been recognized in enhancing regional cooperation and integration, there is a need to explore the potentials of the ASEAN+ 3 framework towards the establishment of a regional economic community. In particular this paper analyzes how trade in services in the health care sector, one of the identified priority sectors in the ASEAN, can be expanded using ASEAN+33 trade negotiation framework.

1 Prepared for the Angelo King Institute of Business and Economics, September 2006 2 Full professor, Economics Department and Assistant professor, Accountancy Department, respectively. 3 ASEAN plus China, Japan, and South Korea

The health care sector has been identified as one of the priority sectors in the ASEAN because of its potentials for growth and as an important driver for enhancing regional integration. Improvement in economic performance of the economies, longer life expectancy of people in the region and increasing population are the major economic and demographic factors that influence the demand for health services. Aside from these factors, institutional as well as developments in information technology are likewise increasing not only the internal demand for health services but also the global trade in health services.

In addition, the health sector has been chosen as one or the priority

sectors for the completion of the MRA and harmonization of technical standards. Although, this sector has a lot of potentials and accompany the growth in income in the region as well in addressing the asymmetry in demography and development, it is one of the most regulated sectors. Because of the high public sector involvement, it highly regulated domestically by “country specific laws and guidelines, and overseen by powerful professional organizations.” The regulations provide powerful barriers to entry for foreign professionals (Manning & Sidorenko, 2005).

International trade in health, however, is problematic since countries in the region consider it as a basic right of its citizens and they provide free health services as mandated by their basic law. As a consequence, provision of health services cannot be subject to forces and disciplines of global trade (Arunanondchai and Fink, 2005). Moreover, the countries in the region are faced with a trade-off between promoting equitable and affordable basic health services with minimum quality or creating an environment for an efficient healthcare system beyond the constraints of the resources of the government. The choice in these health alternatives can be influenced by trade in health services by offering opportunities for “cost savings and access to better quality care, but it can also raise challenges in promoting equitable and affordable access” (Arunanondchai and Fink, 2005). In the light of this backdrop, the following objectives will be pursued in the paper:

1. Evaluate the status of the health care sector within the ASEAN and its competitiveness in the East Asian region. 2. Examine the various trade negotiation and trade facilitation issues by industry and by country in terms of market access, technical barriers, rules of origin and other pertinent issues with special focus on the implementation process and private sector cooperation 3. Examine the flexibilities needed by the industry to effectively adjust to regional integration and liberalization processes 4. Construct a strategic framework and roadmap for ASEAN+3 trade negotiations.

Tullao & Cortez 2006 – Health Care Sector 2 Private Sector Framework for ASEAN Trade Negotiation

2. Overview of health care sector in the ASEAN The health care sector is a rapidly growing sector in the world economy with about USD 3 trillion in revenue per year. Because of improving income of individuals in developed countries and the expansion of more affluent middle class segment in developing economies, the demand for health services is increasing rapidly. The provision of this service has extended beyond the territorial boundaries. Increasing cost of medical and health services, the developments in information and communications technology and mobility of people have made the provision of this service extend beyond national territorial boundaries. Medical services have utilized the information highways to provide services. Sophisticated and financial able people have crossed borders to consume medical, health and related services. Health professionals seeking greener pastures have transferred their locations in providing services. Privately run-hospitals extend their services in other territories to provide sophisticated and medical services to discriminating clientele.

International trade in services can involve the transfer of either the producer or consumer across boundaries to provide or consume services or simply the transfer of services without producers and consumers necessarily transferring locations. As such international trade of services can take four following modes of supply: cross-border transactions, consumption abroad, commercial presence and movement of natural persons. Cross Border Transactions (Mode 1). The service is received by the consumer through the various means of transfer including mail and electronic means without the producer and consumer changing their locations. An example is the provision of telemedicine.

Cross-border transactions in health services have been practiced in the region through the shipment of laboratory samples, diagnosis, clinical consultation via traditional mail channels, and various tele-health services (telepathology, telemedicine, telediagnosis, teleradiology and telepsychiatry) (Chanda, 2002).

Medical transcription has been possible due to developments in information and communications technology (ICT). Outsourcing of data conversion and transcription services are undertaken for several reasons, amongst which is the reduction in labor expense and improvement in the quality of transcription work, absorption by providers of overflow capacity for episodic high-volume periods and increase in turnaround time, this latter being a critical factor especially for billing and claims purposes.


Firms particularly offering medical transcription services may be able to provide consultation on managing medical transcription needs, transcription of dictations of patient’s physical examination, surgery and laboratory reports, immediate hot-line services and the education and training of physicians and health workers in dictation techniques. Because of the labor cost in the Philippines and the understanding of the English language and knowledge in medical terms this supply mode has high potentials on competitiveness. The country’s medical transcription is a huge industry with the U.S. spending close to USD 13 billion and the Philippines accounting for less than one percent of the value of trade. Consumption Abroad. The service is received by the consumer by a temporary transfer of the consumer to the territory of the producer. An example is medical tourism. Alternative or traditional forms of medicine and healing have gained popularity in the Philippines. In addition, there are certain operations like eye surgery, dental and cosmetic surgery that the country can exploit. Many Cambodian patients seeking treatment abroad go to Thailand and Singapore. Majority of foreign patients coming to Singapore for treatment come from other ASEAN countries while those going to Thailand are mostly patients from non-ASEAN countries. Vietnam also exports some health services, mainly to neighboring Cambodia. Commercial Presence. The service is received by the consumer by the transfer of the producer to the territory of the consumer by establishing branches and other forms of commercial presence. An example is the setting up of branches of hospitals in foreign countries.

This supply mode is done through joint ventures of foreign financial and health service providers with local partners that will ensure access to qualified local health personnel and a supply of paying patients. Foreign providers usually invest in health care services through various forms of contracting with local and international health care providers and with partnership with insurance companies.

Foreign commercial presence in medical education or in hospitals may lead to better quality of health care because of increased availability of sophisticated medical technology. At the same time, it may distort the health care market by inducing an internal brain drain. The quality of education of health care in the public sector might suffer due to loss of qualified human resources in the private sector.

The commercial provision of health care via foreign-invested clinics and practices could attract capital and technology. The extent to which governments depends upon how far the national trade policy makes it liberal. Countries like India, Indonesia, Nepal, Sri Lanka, and Thailand have become increasingly open to foreign direct investment. Many joint ventures and alliances have also resulted


to several health care networks and chains (Chanda, 2002). In the ASEAN, Parkway Group Healthcare, the biggest investment group in the healthcare sector in Singapore, has set up joint ventures with hospitals in India, Indonesia, Malaysia, Sri Lanka, and the United Kingdom. The Bumrungrad Hospital in Thailand has entered into management contracts with hospitals in Bangladesh and Myanmar, and has formed a joint venture with a hospital in the Philippines. Bangkok Hospital has established twelve branches in Southeast and South Asia, locating primarily in tourist towns. In Cambodia, Most foreign hospitals are of Chinese origin. Movement of Natural Persons. The service is received by the consumer by the temporary transfer of a natural person as producer to the territory of the consumer. Example is the migration of doctors, nurses and other professionals abroad.

The ASEAN region hosts two of the world’s largest exporters of healthcare workers. The Philippines and Indonesia send large numbers of nurses and midwifes to countries around the world. Short-term flows of health personnel are mainly driven by conscious strategies to promote health services exports, in order to earn foreign exchange and foster cooperation between governments. Many are also driven by wage differentials between countries and better working conditions and living standards (Chanda, 2002).

The movement of health professionals across the region, however, is

governed by domestic regulations. In Malaysia, foreign specialists can be employed in private hospitals and in public hospitals with fewer than two specialists, with the approval of Ministry of Health. Private general practitioners are not allowed, but there are foreign medical officers (MOs) in government clinics. A basic medical degree and at least 3 years (usually 5 years) of clinical experience is required. In the Philippines, there are Constitutional and legal prohibitions in the employment of foreign doctors and nurses. In addition, Filipino citizenship is a requirement for the practice of any profession including doctors, nurses, dentists, pharmacists and other health professionals. In Singapore, according to the data from the Singapore Nursing Board, 23 percent of nurses were overseas residents, mainly from the Philippines and several private hospitals report a smaller but significant share of foreign doctors (Manning & Sidorenko, 2005). In Indonesia the health care sector is closed to foreign doctors and nurses although some foreign doctors were recorded as employed mainly for work as administrators and managers in several foreign hospitals and teachers in overseas twinning programs for nurses in 2004.

Despite high levels of regulation, there is a growing trend of flows of health

professionals in the region due to responses to demographic and economic asymmetries and responses to the push and pull factors of migration (Stilwell, et al.(2004); Hardill and MacDonald (2000); and (Martineau et al. (2004): in Manning & Sidorenko, 2005). The pool of educated English speaking health


workers is one of the bases of the Philippines’ export of medical transcription services to the United States and health professionals in various capitals in Southeast Asia. In Vietnam, the health care sector is closed to foreign health professionals but a limited number of foreign health workers were permitted to enter as part of the FDI in health services. In Indonesia, although foreign doctors and nurses are not permitted to practice their profession in local hospitals, there is an exemption for temporary service provision as senior medical officers or medical specialists in corporations in selected sectors such as in oil, gas and mining. 3. SWOT analysis of health care sector in ASEAN countries

a. Brunei Strengths Expenditures on health services are quite substantial. The government spends USD 244 million to provide health services making the per capita health expenditure at USD 336 in 2002, the highest rate in the region. (The Government of Brunei Darussalam Official Website, 2006).

Around 3.5 percent of GDP is spent on health expenditures with huge government subsidy to provide free medical and health care, which is provided via government hospitals, health centers and health clinics throughout the country (Country Health Information Profiles).

The main hospital in the country, Raja Isteri Pengiran Anak Saleha (RIPAS) Hospital, is a B$ 162 million (US$ 97.63 million) investment by the government, is equipped with modern, cutting-edge medical technology (Country Health Information Profiles).

Doctors per 1,000 population is estimated at 1.0056 one of the highest in the region. There are 2.67 nurses per 1,000 population second only to the index of Singapore. Weaknesses

The weakness of the Brunei Darussalam health care sector is on the apparent over dependence of its citizens on the government in the provision of health services. There is limited private sector participation because health services provision is mainly for domestic and internal demand. Opportunities

As economic development proceeds, there is an increasing demand for health services. The government needs to secure health professionals from abroad to maintain the quality established in the health index of Brunei Darussalam.


As for its external linkages, Brunei is exploiting the opportunities of forging alliances with educational institutions abroad like Dalhousie University and the University of Calgary from Canada and University of Windsor in Great Britain in the field of medicine and health related sciences. Threats

Increasing costs in the provision of health and medical care is the pertinent threat to Brunei. Because health and medical care is free and heavily subsidized, this can put a pressure on government expenditures. Even minor ailments that do not need hospital treatment are referred to hospitals causing a heavy traffic of people in health centers due to the heavy expectation on the quality of health care.

b. Cambodia Strengths

It appears that Cambodia has a strength in spending 12 percent of its GDP on health care. The amount is even larger than its neighboring Vietnam’s GDP health care spending. However, other indicators point that Cambodia’s health care sector is performing inadequately (Hong & Betancourt 2006). Weaknesses

Although, health expenditures as a proportion of GDP is quite high and almost one-fifth of the health expenditure is coming from the public sector, it has some dismal health indicators including 0.2 physicians per 1000 population, 0.5 beds per 1,000 population, and a health expenditure per capita at USD 33 estimated in 2003 (Central Asia Human Development Report 2006). Cambodia’s infant mortality rate and under-five mortality rate are among the highest in the world.

Access to health services in Cambodia remains very limited particularly

access to public health facilities. Corruption aggravated the situation as budget for public health are diverted to other sectors. Provision of health services was banned by the government until the late 1980s (Hong & Betancourt 2006). Opportunities

Cambodia permits cross-border of hospital services. For commercial presence, foreign ownership and management of private hospitals and clinics is permitted as long as at least one director for technical matters is Cambodian. Foreign firms are allowed to provide dental services through joint ventures with Cambodian legal entities


Foreign direct investment in hospitals or diagnostic centers is likely to improve the delivery of health services, especially for the affluent segments of the population in developing countries. Threats

Foreign commercial presence could similarly siphon off trained staff from public facilities to the highly paid private hospitals and practices. c. Indonesia Strengths

More than 60 percent of total health expenditure in Indonesia is for private health provision.

In most areas of Indonesia, the private sector is the dominant provider of health care and now accounts for more than two-thirds of ambulatory care, more than half of hospital contacts and 30 to 50 percent of all deliveries (compared with only approximately 10% a decade ago) (World Bank 2006). Weaknesses

The state of telecommunication infrastructure is weak for efficient transfer of data, voice and images for telemedicine to be fully utilized and optimized. Aside from poor telecommunication infrastructure, the concept of telemedicine has not be fully grasped by people in the rural areas

Indonesia’s health care sector is still under developed. In 2003, 3.1 percent of GDP is spent on health related expenditures. There doctor to population ratio is 0.10 per 1000 population. Only six hospital beds are available per 1,000 people. Total public health expenditure of in 2003 reach USD 9 billion. Opportunities

The country is open to foreign health service providers including Singapore, Australia, Canada. Possible cooperation with health care providers from Singapore and Australia on telemedicine and services could be arranged.

Cooperation with Singapore Gleneagles International on the provision

of health care services under mode 1 is promising given the dearth of health professionals in the country

There is a prospect of setting up telemedicine network to reduce the

cost of health services at the pre-treatment level. Threats


Given the level of income, the utilization of telemedicine may be quite limited. d. Laos Strengths

The number of health care personnel has been increasing since 1975, and in 1990 the ministry reported 1,095 physicians, 3,313 medical assistants, and 8,143 nurses. Most personnel are concentrated in the Vientiane area, where the population per physician ratio (1,400 to one) is more than ten times higher than in the provinces. In 1989 the national ratio was 2.6 physicians per 10,000 persons (Country Studies, Laos 2006). Weaknesses

According to figures from 1988, less than 5 percent of the total government budget was targeted for health, with the result that the Ministry of Public Health was unable to establish a management and planning system to facilitate the changes envisioned. UNICEF considered the effort to construct a primary health care system to have failed entirely (Country Studies, Laos 2006).

Medical facilities and services in Laos are limited and do not meet

Western standards.

Opportunities While consultation with spirit healers and traditional herbal doctors is

prevalent, citizens do not see any contradiction with Western trained medical practitioners.

Threats

Pharmacies are unregulated and their owners unlicensed. As a consequence, misprescription is common for both inappropriate drugs and incorrect dosages. In rural areas, vendors commonly make up small packets of drugs and sell them as single-dose cures for a variety of ailments (Country Studies, Laos 2006). e. Malaysia Strengths

Health sector is one of the rapidly growing sectors in the services sector. There is also a growing prominence of the private sector as a result of the privatization program of the government in the health care sector


The government Implemented various initiatives to improve the quality and efficiency of health care programs including the health promotion and prevention programs, restructuring of public hospitals, setting up sub-specialty centers, development of health infrastructure, use of information and multimedia technology, introduction of the National Healthcare Financing Scheme (NHFS), and the Implementation of National Quality Assurance programs. Weaknesses

For Malaysia’s weakness, there are shortages of doctors, nurses and other health professionals. Opportunities

Malaysia is open to FDI in the health sector. The investments made in the country such as the IBA organization from Australia are other FDIs that helped propel the Malaysian health sector. However, not only does Malaysia depend on foreign companies investing in them, Malaysian health companies are also studying on establishing investments in Bangladesh.

Developments in ICT and its impact on telemedicine and cross border transactions in health services are also seen as opportunities. An Australian company, IBA Health Limited, is an E-Health company that has been able to win the bid to provide one of Malaysia’s top teaching hospitals with a Total Hospital Information System (THIS) which will consolidate and strengthen its administrative and health-information management systems.

There is a growing demand from ASEAN to seek medical treatment in Malaysia. Some 100,000 foreign patients seek treatment in Malaysian hospitals. Many of the patients are coming from Indonesia and earning the sector some USD 40 million annually.

Malaysia is promoting health tourism within the region with quality health service at affordable prices

The country has the ability to absorb the technological advances, developments and opportunities from countries like Australia, New Zealand and U.S. to improve the provision of health services and create demand niches.

Although there are no MRAs among ASEAN countries on professional medical and nursing services, discussion has started between the members on developing MRA in nursing, and to enhance recognition of qualifications between Singapore and several countries outside the ASEAN. In the preliminary draft of an MRA on nursing in ASEAN, the decision on recognition of foreign nursing qualifications is left to a nursing board/council in the host


countries, and foreign-trained nurses are required to work with local nurses (ASEAN-ANU, 2005).

Malaysia’s middle class is becoming more economically prosperous. This can also increase the demand for medical services in addition to the increasing demand for high quality medical and health services by overseas consumers.

Lastly, Malaysia’s promotion of ‘My Second Home Program’ targets the

Middle Eastern Muslims. Threats

Thailand, Singapore are the major competitors in health tourism f. Myanmar Weaknesses

It has poor health sector as indicated by 0.6 beds per 1,000 population, 0.3 physicians per 1000 population. The government spends only 2 percent of the GDP for health expenditures. Around 4 percent of government expenditures is spent on health while almost 85 percent of health expenditures is provided by the private sector. Health expenditure per capita was estimated at USD 86 in 1998. Source: Central Asia Human Development Report 2005 Opportunities

Myanmar is more open to trade in health services as reflected by the presence of foreigners in health sector and most of its foreign hospitals are of Chinese origin.

Bumrungrad Hospital in Thailand has entered into management

contracts with hospitals in Myanmar.

Facility in the English language can serve as an opportunity for deploying nurses overseas in the future.

g. Philippines Strengths

Domestic service providers have lower maintenance costs in the same manner that Filipino medical practitioners have lower professional fees as compared to foreign competition in the event of a liberalized health and medical services.


While advancements in technology are lagging behind, Filipino professionals have the ability to technically develop expertise in laser eye surgery, cosmetic surgery, and dental medicine.

The country now has world-class general and specialized hospitals

that can be seen to compete with foreign health and medical service providers.

As for the quality of health professionals, the country has a wealth of

competent health professionals in health services, health education and health research. Moreover, Filipino health professionals have the caring attitude towards patients, which is unique in the culture.

In the absence of modern technology, Filipino medical professionals

have been creative and resourceful in improvising for quality health service yet they are adaptable to modern technology once made available to them.

The quality of medical schools is also comparable to world standards.

Foreign students study medicine in the Philippines for cost and quality reasons. Health colleges and universities are available all over the country. In addition, alternative health services and traditional medical technologies are being integrated with mainstream medical practice. Weaknesses

The same thing with nurses and teachers, the quality of health professionals is threatened by over migration. The excellent ones get hired in developed countries, while the inexperienced and incompetent are left in the Philippines to train and gain more knowledge and experience. This threatens the health services sector because brain drain might cause further inefficiencies in the sector.

Doctors and other non-nursing health professionals are going back to school to study nursing and explore the opportunities of working abroad. Because of the huge demand for nursing, many of the qualified and well-trained nurses have migrated abroad making it more difficult and costly to train nurses.

The country also lacks specialized technicians, physicians and highly trained health professionals. The proliferation of herbal and other alternative medicines shows the inability of the BFAD to evaluate her-bal medicine.

Because of the huge demand for nursing education, the quality of nursing education has suffered. Many nursing schools have been established as shown by the 100 percent increase in the number of nursing schools in the last 2 years. Many of these schools have limited affiliation with hospitals. Given the number of hospitals and their number is not increasing in the same


rate as nursing schools, clinical and practical exposure of these graduates are very limited.

As for limited resources, although the total health expenditure is increasing, the real value of this has been declining and estimated at Php 434 in 2003. Moreover, the number of hospitals should be increased to increase the hospital beds per 10,000 population. The per capita expenditure is rather low. The share of health expenditure to GNP is below the 5 percent prescribed by WHO.

While provision of health services is left to the private sector, the high cost of establishing hospitals makes the sector unattractive to invest in. These limited resources also resound to lack of resources to conduct research and development; and outdated technology and facilities. Opportunities

The demographic changes, particularly the ageing of population in developed countries is both an opportunity and threat for the Philippines. It is an opportunity because the Philippines can provide medical and health services under various modes of supply. The most prominent is the movement of natural persons. Although it is also possible that health and medical care can be provided by Philippine health service firms abroad. It is also possible for consumption abroad, or in the case of medical tourism and retirement havens for the Philippines.

High medical and health costs in developed countries lead to opportunities in medical tourism and personalized health care in the Philippines.

Rapid developments in ICT can be explored for certain aspects so medical and health care can be performed or provided using the Internet or telecommunications.

The increased awareness and acceptance to use alternative therapies can be exploited by the Philippines in marketing traditional medicines and therapy.

Deregulation in foreign markets is another opportunity where mutual recognition of nurses, doctors and other health professionals could be tapped. Threats

The egress of health professionals as well as shift of other health professionals into nursing is threatening the viability of the health sector in providing adequate and inexpensive health and medical care to an increasing population. Moreover, because of the great demand for nurses, the best and


experienced nurses including the precious nursing instructors are the ones easily recruited for employment abroad.

There is also an insufficiency in health infrastructure. As indicated by the bed capacity per 10,000 population, it declined from a high of 18.2 in 1980 to 10.4 in 2004. This is an indicator that the sector is not increasing the number of hospitals and their number of beds to an increasing population. Moreover, of the 1,723 hospitals, 192 are situated in NCR representing 11 percent.

Health insurance in the Philippines is non-portable. This means that health services bought in the other countries could not be availed of in the Philippines, thus preventing trade in services.

In the absence of mutual recognition agreements between countries,

professionals would be subject to further examinations and tests to ensure their qualification and competence to practice in the host country. Nurses for the meantime serve as nursing aides until they pass a federal or national examination that will allow them to fully practice their profession.

Alternative medicine in the country appears to go underground as giant

pharmaceutical companies and branded medicines dominate the market. In the first place, generic medicines are not as socially acceptable and preferred by medical practitioners over branded ones. In the absence of support, medical care in the country is expensive.

The establishment of a hospital is very costly even if it is passed on to

the responsibility of local government units. Government hospitals have been suffering from the lack of supply and experienced doctors.

The regulation and complexity of health services could serve as a

threat to existing and potential market players. Regulations could serve as a hindering factors to the growth and development of this service sector. h. Singapore Strengths

Singapore is one of the best health services provider in Asia. Provision of health services is comparable with U.S. and Great Britain. It is considered as Asia’ Health Hub with the quality of health infrastructure and health professionals.

Singapore has a provision of 8,279 hospital beds for acute care from a

total of 11,840 hospital beds in 2004. Private sector participation in the provision of health is significant. More than 50 percent of the hospitals are privately-owned although only 25 percent of the number of hospital beds is in


private hospitals. Of the 6,492 doctors, 44 percent are in the private sector. More than 65 percent of dentists are in the private sector and 25 percent of the nurses are in the private sector and 56 percent of the pharmacists.

There are 1.5 doctors, 0.3 dentists, 4.6 nurses and 0.3 pharmacists per 1000 population. In 2004, the government allocated 5.9 percent of its budget to health expenditures or SD 491 per person.

Singapore has a number of MRA in various areas in health services

with various groups of countries. It also has well developed trade in services at various modes, mode 1 (telehealth), mode 2 (huge foreign patients coming to Singapore for treatment), mode 3 (chain of hospitals like Gleneagles International) and mode 4 (recruitment of foreign medical scientist). Weaknesses

As for the weaknesses of Singapore’s health care sector, the cost of treatment is quite prohibitive.

Their health sector lacks regulatory framework dealing with malpractice

liability, confidentiality, privacy, recognition, lack of insurance coverage and cross border arrangements.

Singapore has to recruit foreign doctors and nurses in recent years

because local training institutions have not been able to meet demand. Opportunities

Current foreign patients treated in Singapore reached the 200,000 market in recent years and it is expected to reach 1 million per year by 2012.

Approximately 40 percent of annual revenues from health services are

derived from foreign patients. Developments in ICT allows the expansion of the use of Telehealth, an

on-line medical services that allows medical images, x-rays, and other medical diagnostic tests to be digitized and transmitted all around Asia using the computer. Estimated demand for telehealth is estimated at S$ 1.25 trillion.

Regional disparities in the state of health care sector will allow the

utilization of Singapore’s on-line educational data bases and training for health professionals in other countries in the ASEAN.

Foreign patients come from developed (Malaysia, Japan, U.S.) and

developing countries (Myanmar, Bangladesh). Close to 15 percent of the


foreign patients come to Singapore for major treatments like cancer and heart problems.

With per capita income similar with many developed countries, the

demand for health services will rapidly increase given the high income elasticity demand for health services.

Lastly, there is an increasing demand for high quality medical and

health services by overseas consumers Threats

With the improvement in ICT, other countries in the region may be cost efficient in the provision of Telehealth services.

With an aging population and low population growth rate, the internal

demand for health services may increase faster than the ability to provide heath infrastructure and health professionals.

An aging population get put a strain on the capability of the

government to provide public health services i. Thailand Strengths

Health expenditure in Thailand is 6 percent of GDP (Hiranprueck 2004) and per capita public expenditure is estimated at USD 63 fourth highest in the region. Public health expenditure has been increasing from 3.8 percent in 1980 to 6 percent in 2002.

Low tariff rates on imported medical equipment makes Thai hospitals

acquire new and technologically advanced medical equipment in the provision of health care.

The country is competitive in by-pass operations and in the daily rate

of hospital room cost There are 11 medical schools producing 1,300-1500 medical

professionals annually. The provision of health and medical services that cater to foreigners

are competitive by regional standards. Instead of paying USD 39,000 for a hip replacement, a person can pay the equivalent of USD 3,000 in Thailand (International Medical Tourism, 2005). This can be attributed to the lower labor costs and the observed price differences (Arunanondchai & Fink, 2005). Weaknesses


The doctor per 1000 population ratio estimated at 0.03 and 0.16

nurses per 1,000 people. Expansion of health care sector will demand more health professionals. If schools are not as fast in producing health professionals, the Thai government may be willing to accept foreign health professionals. Very few overseas professionals, however, work in the health care industry in Thailand.

There is difficulty in deploying health professionals overseas because

of the language barrier. The Thai health care sector requires language proficiency for practice in the health profession Opportunities

The volume and value of consumption abroad in medical and health services is quite significant in Thailand amounting to USD 482 million and around 603, 000 foreign patients from Japan and the ASEAN.

The medical tour companies that serve Thailand put emphasis on

quality care and luxury accommodations. Thailand offers modern medical services to medical tourists (International Medical Tourism, 2005). Medical tourism has given Thailand additional revenue of 20 billion baht or US $482 million in 2005 (Arunanondchai & Fink, 2005).

Bumungrad Hospital in Thailand has entered into management

contracts with several hospitals in Myanmar and Bangladesh, and has formed a joint venture with a hospital in the Philippines. Bangkok hospital has established twelve branches in South and Southeast Asia, which are generally located in tourist areas (Arunanondchai & Fink, 2005).

Promotion of the government of the Medical Hub in Asia is seen as

another significant opportunity. The country leads in the number of overseas patients treated in the ASEAN region. Threats Competition from Singapore and Malaysia is seen as the significant threat.

j. Vietnam Strengths

Vietnam is one of ASEAN’s low level income countries. However, it exports some health services, mainly to its neighbor Cambodia. Nonetheless, Cambodian patients who seek treatment abroad choose the reputable hospitals in Thailand and Singapore. Several private hospitals in Cambodia


make a business of facilitating treatment in foreign hospitals. Similar services are also provided by independent agents at Cambodia’s borders. [Arunanondchai, 2005].

Vietnam’s health indicators are better than would be expected for a

country at its development level, and the country continues to improve at rates that equal or surpass those in most neighboring countries (Adams 2005).

New policy tools have been developed by the government to include

including user fees, health insurance and health-care funds for the poor. These tools all focus on the financing of health, but still failed to merge into a coherent health financing system. Therefore, a strong private sector emerged to provide health care in Vietnam (Adams 2005).

Vietnam spends about 5-6 percent GDP on health care (both public

and private expenditure), twice as much as its neighbor Lao PDR, but half as much as Cambodia (Adams 2005). Weaknesses

Health care has been controlled by the government for the past 20 years. Opportunities Threats

Summary analysis

Malaysia, Singapore and Thailand are the top exporters of health care

services in the ASEAN region. Table 1 illustrates the number of patients, their ASEAN countries of origin and the total value of export revenues in million U.S. dollars. Table 1. Export of health tourism services

Export revenues No. of patients Origin of patients Malaysia USD 40 million > 100,000 60% from Indonesia; 10%

from other ASEAN countries Singapore USD 420 million 210,000 45% from Indonesia; 20%

from Malaysia; 3% from other ASEAN countries

Thailand USD 482 million 470,000 (2001) 630,000 (2002)

42% from the Far East (mostly Japan); 7% from ASEAN countries

Sources: Singapore Tourism Board; Abidin, Alavi, and Kamaruddin (2005); Arunanondchai (2005).


Singapore has a line up of healthcare services from health screening to organ transplants. Foreign patients also come to Singapore for a broad range of specialist care including Cardiology, Gynaecology, Orthopaedic Surgery, Oncology, Otorhinolaryngology, Urology, Neurosurgery and Opthalmology, besides General Surgery and General Medicine. Singapore’s medical tourism sector was developed and being promoted by three key agencies: the Economic Development Board, the Singapore Tourism Board and the International Enterprise Singapore.

Statistics in 2003 showed that more than 200,000 foreigners have sought medical care in Singapore. This sector aims to serve one million foreign patients a year by 2012 and generate USD 3 billion in revenues and create at least 13,000 jobs in the health industry.

Thailand’s health tourism sector has shown dramatic increases since it

launched the amazing Thailand campaign in 1997. Around 470,000 patients in 2001 were accommodated and the number increased to 630,000 in 2002. Table 2. Price comparisons, 2001 Coronary by-pass

graft surgery (USD) Single private hospital room

Malaysia 6,315 52 Singapore 10,417 229 Thailand 7,894 55 United Kingdom 19,700 n/a United States 23,938 1,351

Price comparisons on coronary bypass graft surgery and single private

hospital room for the year 2001 are presented in Table 2. Clearly, Thailand and Malaysia are in the same price range, while Singapore is still more affordable than its U.K. and U.S. counterparts.

Table 3 summarizes health indicators of the ASEAN countries as to public health expenditure, private health expenditure, health expenditure per capita, number of physicians etc.

Table 3. ASEAN Comparative ASEAN Health Service Indicators Indicators Year/s Singapore Brunei Malaysia Thailand PhilippinesPublic health expenditure (% of GDP) 2002 1.3 2.7 2 3.1 1.1 Private health expenditure % of GDP 2002 3 0.8 1.8 1.3 1.8 Health expenditure per capita (PPP US$ 2002 1,105 653 349 321 153 One-year-olds fully immunized against tuberculosis % 2003 97 99 99 99 91 Births attended by skilled health personnel (%)

1995-2003 100 99 97 99 60


Physicians (per 100,000 people)

1990-2004 140 101 70 30 116

Table 3. continued Indicators Year/s Viet Nam Indonesia Myanmar Cambodia Lao PDR Public health expenditure (% of GDP) 2002 1.5 1.2 0.4 2.1 1.5 Private health expenditure % of GDP 2002 3.7 2 1.8 9.9 1.4 Health expenditure per capita (PPP US$ 2002 148 110 30 192 49 One-year-olds fully immunized against tuberculosis % 2003 98 82 79 76 65 Births attended by skilled health personnel (%)

1995-2003 85 68 56 32 19

Physicians (per 100,000 people)

1990-2004 53 16 30 16 59

Source: Central Asia Human Development Report 2005

4. Trade negotiation issues on health care sector Factors to be considered by industry leaders/private sector on the ASEAN Integration Framework The health care sector can be seen as an avenue for regional integration. It can be viewed that the health industry can be expanded through trade in health services in ASEAN with Japan, China, and Korea. In the light of domestic regulations, what are the potentials of enhancing trade in health services under various modes of supply in the region? Using the GATS modes of supply are the following opportunities:

Mode I or Cross Border Transactions Telemedicine, medical transcriptions, tele-radiology, tele-pathology, etc. Mode 2 or Consumption Abroad Health tourism, alternative medicine, medical treatment, medical education Mode 3 or Commercial Presence Establishment of foreign hospitals, establishment of foreign medical schools Mode 4 or Movement of Natural Persons


Movement of doctors, nurses and other health professionals in the region

Secondly the following market access restrictions, regulatory measures and national treatment limitations should be addressed. Market Access Limitations

Mode I or Cross Border Transactions Limitations on foreign-service providers in telemedicine Mode 2 or Consumption Abroad Limitations on the entry of foreign patients seeking treatment in the country Limitations on the type of ailments allowed to be treated in the country Limitations on the allowable period of stay of patients in the country Limitations on the entry of foreign students in health related courses Mode 3 or Commercial Presence Limitations on the number, type of hospitals, health clinics, and home for the aged that can be established by foreigners Limitations on foreign equity participation in the establishment of hospitals, medical and nursing schools Mode 4 or Movement of Natural Persons Limitations on the number of foreign health professionals allowed to practice in the country

Regulatory Measures

Mode I or Cross Border Transactions Regulatory measures governing the conduct of telemedicine, tele-radiology, tele-pathology and medical transcriptions Mode 2 or Consumption Abroad Regulations of alternative forms of medicine International accreditation of hospitals to facilitate the portability of health insurance of foreign patients Mode 3 or Commercial Presence Regulations in the establishment, management and operation of hospitals, health spas and clinics for alternative medicine


Regulations in the establishment, management and operation of medical schools and nursing schools Mode 4 or Movement of Natural Persons Permission of foreign heath professionals to practice in the country Mechanisms of recognition of training, licensing and experience of foreign health professionals

National Treatment Limitations

Mode I or Cross Border Transactions Differentiated treatment of foreigners in the granting of incentives for telemedicine and other health-related cross border transactions Mode 2 or Consumption Abroad Differential pricing of health and medical services for citizens and foreign patients Differential treatment of foreigners in the granting of government subsidy for the provision of medical services Differentiated price system in charging tuition for foreign students in health related courses Mode 3 or Commercial Presence Provision of government subsidies and incentives to private hospitals Extent of government subsidies given to foreign-owned or foreign-controlled hospitals Provision of government support to private medical and nursing schools Extent of government support to foreign-owned or foreign-controlled medical schools and nursing schools Mode 4 or Movement of Natural Persons Coverage of practice of foreign medical and health services Differentiated treatment of foreigners in health and medical practice The recommendations to strengthen ASEAN integration with

respect to market access, competitiveness. industry upgrading and trade facilitation are the following: Ways of addressing market access limitations in various modes of supply

Mode I or Cross Border Transactions Openness to the liberalization of cross border transactions in health and medical related activities


Mode 2 or Consumption Abroad Lifting the restrictions on the number and duration of stay of foreigners seeking medical treatment in the country Lifting the limitations on the kind of ailments that foreign patients can seek medical treatment in the country Lifting the limitations on the number of foreign students allowed to enter and study in health related programs Mode 3 or Commercial Presence Reducing or lifting the limitations on the number, and type of hospitals, health clinics, and home for the aged that can be established by foreigners Reducing or lifting the limitations on foreign equity participation in the establishment of hospitals, medical and nursing schools Mode 4 or Movement of Natural Persons Reducing or lifting the restrictions on the number of foreign health professionals allowed to practice in the country Measures taken in the country to lift these limitations

Ways of improving competitiveness and upgrading the industry

Mode I or Cross Border Transactions Improve country’s telecommunications infrastructure to enhance the cross border trade in health and medical services Availability of trained human resources to carry out cross border trade in health and medical services Improve the English language competency of country’s graduates Mode 2 or Consumption Abroad International accreditation of hospitals to facilitate the portability of health insurance of foreign patients Increase the number of accredited hospitals International accreditation of medical and nursing schools Improvement of quality and standards of medical and nursing schools Mode 3 or Commercial Presence Create an environment conducive to foreign investment in health and medical services Availability of qualified health and medical professionals to attract foreign capital in the field of health services and medical and nursing education


Mode 4 or Movement of Natural Persons Attractive compensation package for health and medical professionals to attract foreign health and medical professionals to practice in the country

Ways of improving trade facilitation in health services

Mode I or Cross Border Transactions Ease in the release the imported computers and telecommunications equipment in the country’s customs bureau Mode 2 or Consumption Abroad Make immigration policies less restrictive in the entry of students, patients, and tourists Measures undertaken to address portability of foreign health insurance in the country Mode 3 or Commercial Presence Assist hospitals in getting international accreditation Mode 4 or Movement of Natural Persons Establish mutual recognition arrangements to facilitate the movement of natural persons in health services Participation in the discussions on the establishment of a mutual recognition arrangement (MRA) in the health sector in the ASEAN

Suggested strategy for trade negotiations with Japan, China and Korea

How can ASEAN exploit the demographic asymmetry among ASEAN and East Asian nations to enhance East Asian integration via health and medical services?

Push for the opening of the health sector in Japan and South Korea. • Conduct language and cultural training programs for ASEAN doctors,

nurses and other health professionals to facilitate the entry to Japan and Korea

• Promote health tourism • Establish retirement homes in ASEAN countries • Allow the temporary movement of health professionals in countries with

shortages of health professionals What can ASEAN get from the well-developed alternative medicine of China and the sophisticated Western-type medicine available in Singapore, Japan and


South Korea to push for the integration of East Asia via health and medical services? Development of programs in alternative medicine

• International accreditation of curricular programs in medicine, nursing and other health professions

• What can ASEAN do in exploiting the regional health tourism route in enhancing regional economic integration?

Establish an ASEAN+3 wide framework for portability of medical and health insurance

• More liberal immigration policies pertaining to the stay of patients seeking treatment overseas

• Development of ASEAN+3 visa for health tourism and temporary movement of health professionals in the region

• Accreditation of hospital and medical centers • Promote ASEAN+3 as haven for sophisticated type medical treatment and

exotic alternative medicine • Development of rules of rules on the privacy and confidentiality of patient

How can ASEAN+ 3 proceed in the establishment of a regional MRA for medical and health professionals? Training and transfer of skills towards the harmonization of standards in the practice of various health professions and in medical and health education towards the establishment of MRA in health

• Assist countries in the development of regulatory boards in health professions

• Facilitate the accreditation of hospitals and medical and nursing schools • Development of a regulatory framework for alternative medicine

What technical assistance measures can be extended by developed countries in the region to facilitate trade in health services?

• Assist developing countries improve their medical and nursing curricular programs to meet international standards

• Language training for foreign health professionals seeking employment overseas or in the region.

5. Highlights of the Technical Workshop on November 3, 2006 Variability of Professional Fees

One of the weaknesses of the Philippine medical sector in exploiting the opportunities in medical tourism in the region is the variability of professional fees charged by doctors. As self-employed professionals with affiliation with hospitals Tullao & Cortez 2006 – Health Care Sector 25 Private Sector Framework for ASEAN Trade Negotiation

doctors are able to segment their market. As a consequence, they practice price discrimination in charging professional fees based on the capacity to pay of their patients.

If the range of price variability is very wide, it can make the provision of

health services in the country uncompetitive relative to the other countries in the region where professional fees are known and fixed. In addition, medical insurance requires that professional fees of doctors should be established before hand. If they are not stated and have wide variation, health and medical insurance firms can consider it as a factor for not accrediting the doctor and consequently the hospital leading to the non-portability of medical insurance. Moreover, well known medical doctors may not want to be accredited by health insurance since they have to reveal their professional fees. This may weaken their ability to segment the market and discriminate in charging professional fees.

Thus, it was recommended that there is a need for the PCCI to engage hospital administrators and medical practitioners in a discussion for them to appreciate the benefits of expanding regional trade in medical services. The standardization of medical professional fees can be discussed in these engagements. Framework for trade negotiation

The framework for trade negotiation in the health and medical sector in the region should be based on existing differences in the regulatory frameworks governing the health sectors in various ASEAN countries. Health and medical sector is a highly regulated sector in many countries since it is considered a basic right sometimes enshrined the fundamental law of the country. Because of this, many citizens and to some extent policy makers in the several countries view health as a non-tradable service that should not be subjected to global market forces. But because of limited public funds for medical and health services, on the one hand, and the increasing demand for efficient health care systems in many countries, on the other hand, trade in health services becomes very crucial in offering access to better quality of health care.

However, because of the differences in domestic regulation there is a

need to standardize these regulatory frameworks to allow the greater trade in services within the region. In particular, there is a need to liberalize the limitations on market access, national treatment and domestic regulation to make the health sector market friendly to domestic and foreign consumers and suppliers within the region. Basis of intra-regional trade in health services

In expanding trade in health services with the region, the basis of trade will be anchored on the relative strengths of the country in a specific field in the


medical and health sector. In order to attain this, the ASEAN as a regional institution should push for policies that would promote the role of market forces in enhancing intra-regional trade in health and medical services. In addition, technical assistance should be extended to other member countries to improve their environment in facilitating market friendly policies. Best practices in enhancing regional trade in health services Some best practices in the health and medical services can likewise be promoted that can make the region competitive in the medical and health care sector including the following:

• Hasten the international accreditation of hospitals by addressing the limitations of hospitals through technical assistance

• Expand intra-ASEAN trade based on the relative strengths of the country

• Work towards the portability of health and medical insurance • Harmonization of pharmaceutical products • The regional competitiveness in health and medical sector can also be

addressed by making medicine and pharmaceutical products competitive.


Bibliography Adams, S. (2005). Vietnam’s Health Care System: A Macroeconomic

Perspective. Paper Prepared for the International Symposium on Health Care Systems in Asia Hitotsubashi University, Tokyo http://www.imf.org/external/country/VNM/rr/sp/012105.pdf#search=%22vietnam%20health%20care%20sector%22. Retrieved September 2006.

Arunanondchai, J. & Fink, C. (2005). Trade in Health Services in the ASEAN

Region. December 10, 2005 Chanda, R. (2002). “Trade in health services.” Bulletin of the World Health

Organization, 2002, 80(2). Hong, R. & Betancourt, J. (2006). Healthcare in Cambodia. The provision of

health care in Cambodia at a glance. Retrieved September 2006. Economic Institute of Cambodia. http://www.eicambodia.org/downloads/files/provision.pdf

Sidorenko, A. & Manning, C. (2005). The regulation of professional migration in

the ASEAN. Insights from the health and IT sectors. The Australian National University

Tullao, T. & Cortez, M. (2006). Enhancing the movement of natural persons in

the ASEAN region: prospects and constraints. Monograph. Asia-Pacific Research and Training Network on Trade. UNESCAP.

Urata, S. (2006). A Shift from Market-Driven to Institution-Driven Regionalization

in East Asia. Waseda University Summer Seminar, Creating Cooperation and Integration in Asia. Graduate School of Asia-Pacific Studies, Waseda University. (Unpublished Monograph).

World Bank (2006). Improving Indonesia’s Health Outcomes. Bank Dunia. The

World Bank. Retrieved September 2006. http://siteresources.worldbank.org/INTEAPREGTOPHEANUT/Resources/health.pdf#search=%22indonesia%20health%20care%20sector%22


http://www.eicambodia.org/downloads/files/provision.pdf

1

Development of a private Development of a private sector framework for ASEAN sector framework for ASEAN

trade negotiations: Health trade negotiations: Health care sectorcare sector

Tereso S. Tullao, Jr. & Michael Angelo A. CortezTereso S. Tullao, Jr. & Michael Angelo A. CortezDe La Salle University, ManilaDe La Salle University, Manila

May 2007May 2007

IntroductionIntroduction

Economic integration of East and Economic integration of East and Southeast AsiaSoutheast AsiaInstitutional factors that facilitate tradeInstitutional factors that facilitate tradeAFTA, AFAS, ASEAN+3AFTA, AFAS, ASEAN+3Health care sector has been identified as Health care sector has been identified as one of the priority sectors in the ASEANone of the priority sectors in the ASEANProblems with international trade in health Problems with international trade in health servicesservices

2

ObjectivesObjectivesEvaluate the status of the health care sector within the Evaluate the status of the health care sector within the ASEAN and its competitiveness in the East Asian ASEAN and its competitiveness in the East Asian region.region.Examine the various trade negotiation and trade Examine the various trade negotiation and trade facilitation issues by industry and by country in terms of facilitation issues by industry and by country in terms of market access, technical barriers, rules of origin and market access, technical barriers, rules of origin and other pertinent issues with special focus on the other pertinent issues with special focus on the implementation process and private sector cooperationimplementation process and private sector cooperationExamine the flexibilities needed by the industry to Examine the flexibilities needed by the industry to effectively adjust to regional integration and effectively adjust to regional integration and liberalization processesliberalization processesConstruct a strategic framework and roadmap for Construct a strategic framework and roadmap for ASEAN+3 trade negotiations.ASEAN+3 trade negotiations.

Overview of healthcare in the Overview of healthcare in the ASEANASEAN

USD 3 trillion in revenue per yearUSD 3 trillion in revenue per yearInternational trade in services can involve International trade in services can involve the transfer of either the producer or the transfer of either the producer or consumer across boundariesconsumer across boundariesMode 1 Mode 1 –– cross border transactionscross border transactionsMode 2 Mode 2 –– consumption abroadconsumption abroadMode 3 Mode 3 –– commercial presencecommercial presenceMode 4 Mode 4 –– movement of natural personsmovement of natural persons

3

SWOT analysis of the SWOT analysis of the healthcare sector of healthcare sector of ASEAN countriesASEAN countries

Summary AnalysisSummary Analysis

Malaysia, Singapore and Thailand are the Malaysia, Singapore and Thailand are the top exporters of health care services in the top exporters of health care services in the ASEAN region. ASEAN region.

Table 1. Export of health tourism services Export revenues No. of patients Origin of patients

Malaysia USD 40 million > 100,000 60% from Indonesia; 10% from other ASEAN countries

Singapore USD 420 million 210,000 45% from Indonesia; 20% from Malaysia; 3% from other ASEAN countries

Thailand USD 482 million 470,000 (2001) 630,000 (2002)

42% from the Far East (mostly Japan); 7% from ASEAN countries

Sources: Singapore Tourism Board; Abidin, Alavi, and Kamaruddin (2005); Arunanondchai (2005).

4


StrengthsStrengthsIncreasing health expenditures in some Increasing health expenditures in some countriescountriesIncreasing private sector participation in Increasing private sector participation in the health sectorthe health sectorAvailability of wellAvailability of well--trained health trained health professionalsprofessionalsAvailability of medical services Availability of medical services comparable with global standardscomparable with global standards


WeaknessesWeaknessesHealth sector is still underdeveloped in Health sector is still underdeveloped in poor countriespoor countriesShortages in health professionals in some Shortages in health professionals in some countriescountriesOverOver--migration of health professionals migration of health professionals threatens the provision of health services threatens the provision of health services

5


OpportunitiesOpportunitiesRapid economic growth in the regionRapid economic growth in the regionAging population in Northeast AsiaAging population in Northeast AsiaAsymmetries in demography, economic Asymmetries in demography, economic development and labor marketdevelopment and labor marketWellWell--developed alternative medicine in developed alternative medicine in Northeast AsiaNortheast Asia


ThreatsThreatsIncreasing cost in the provision of healthIncreasing cost in the provision of healthVariability in the regulatory framework on health Variability in the regulatory framework on health services across the regionservices across the regionNonNon--portability of medical and health insuranceportability of medical and health insuranceLimited hospitals with international accreditationLimited hospitals with international accreditationVariability of prices and quality of Variability of prices and quality of pharmaceutical productspharmaceutical products

6

Trade Negotiation IssuesTrade Negotiation Issues

The health care sector can be seen as an The health care sector can be seen as an avenue for regional integration. It can be avenue for regional integration. It can be viewed that the health industry can be viewed that the health industry can be expanded through trade in health services expanded through trade in health services in ASEAN with Japan, China, and Korea.in ASEAN with Japan, China, and Korea.


OPPORTUNITIESOPPORTUNITIESMode I or Cross Border Transactions Mode I or Cross Border Transactions -- Telemedicine, Telemedicine,

medical transcriptions, telemedical transcriptions, tele--radiology, teleradiology, tele--pathology, etc.pathology, etc.Mode 2 or Consumption Abroad Mode 2 or Consumption Abroad -- Health tourism, Health tourism,

alternative medicine, medical treatment, medical alternative medicine, medical treatment, medical educationeducation

Mode 3 or Commercial Presence Mode 3 or Commercial Presence -- Establishment of foreign Establishment of foreign hospitals, establishment of foreign medical schoolshospitals, establishment of foreign medical schools

Mode 4 or Movement of Natural Persons Mode 4 or Movement of Natural Persons -- Movement of Movement of doctors, nurses and other health professionals in the doctors, nurses and other health professionals in the regionregion

7


MARKET ACCESS LIMITATIONSMARKET ACCESS LIMITATIONSMode I or Cross Border TransactionsMode I or Cross Border TransactionsLimitations on foreignLimitations on foreign--service providers in telemedicineservice providers in telemedicineMode 2 or Consumption Abroad Mode 2 or Consumption Abroad Limitations on the entry of foreign patients seeking Limitations on the entry of foreign patients seeking

treatment in the countrytreatment in the countryLimitations on the type of ailments allowed to be treated in Limitations on the type of ailments allowed to be treated in

the countrythe countryLimitations on the allowable period of stay of patients in the Limitations on the allowable period of stay of patients in the

country country Limitations on the entry of foreign students in health related Limitations on the entry of foreign students in health related

coursescourses


MARKET ACCESS LIMITATIONSMARKET ACCESS LIMITATIONSMode 3 or Commercial Presence Mode 3 or Commercial Presence Limitations on the number, type of hospitals, health clinics, Limitations on the number, type of hospitals, health clinics,

and home for the aged that can be established by and home for the aged that can be established by foreignersforeigners

Limitations on foreign equity participation in the Limitations on foreign equity participation in the establishment of hospitals, medical and nursing schoolsestablishment of hospitals, medical and nursing schools

Mode 4 or Movement of Natural Persons Mode 4 or Movement of Natural Persons Limitations on the number of foreign health professionals Limitations on the number of foreign health professionals

allowed to practice in the countryallowed to practice in the country

8


REGULATORY MEASURESREGULATORY MEASURESMode I or Cross Border Transactions Mode I or Cross Border Transactions Regulatory measures governing the conduct of Regulatory measures governing the conduct of

telemedicine, teletelemedicine, tele--radiology, teleradiology, tele--pathology and medical pathology and medical transcriptionstranscriptions

Mode 2 or Consumption Abroad Mode 2 or Consumption Abroad Regulations on alternative forms of medicine Regulations on alternative forms of medicine International accreditation of hospitals accredited to International accreditation of hospitals accredited to

facilitate the portability of health insurance of foreign facilitate the portability of health insurance of foreign patientspatients


REGULATORY MEASURESREGULATORY MEASURESMode 3 or Commercial Presence Mode 3 or Commercial Presence Regulations on the establishment, management and Regulations on the establishment, management and

operation of hospitals, health spas and clinics for operation of hospitals, health spas and clinics for alternative medicinealternative medicine

Regulations on the establishment, management and Regulations on the establishment, management and operation of medical schools and nursing schoolsoperation of medical schools and nursing schools

Mode 4 or Movement of Natural Persons Mode 4 or Movement of Natural Persons Permission of foreign heath professionals to practice in the Permission of foreign heath professionals to practice in the

countrycountryMechanisms of recognition of training, licensing and Mechanisms of recognition of training, licensing and

experience of foreign health professionalsexperience of foreign health professionals

9


NATIONAL TREATMENT LIMITATIONSNATIONAL TREATMENT LIMITATIONSMode I or Cross Border Transactions Mode I or Cross Border Transactions Differentiated treatment of foreigners in the granting of Differentiated treatment of foreigners in the granting of

incentives for telemedicine and other healthincentives for telemedicine and other health--related related cross border transactionscross border transactions

Mode 2 or Consumption Abroad Mode 2 or Consumption Abroad Differential pricing of health and medical services for Differential pricing of health and medical services for

citizens and foreign patientscitizens and foreign patientsDifferential treatment of foreigners in the granting of Differential treatment of foreigners in the granting of

government subsidy for the provision of medical servicesgovernment subsidy for the provision of medical servicesDifferentiated price system in charging tuition for foreign Differentiated price system in charging tuition for foreign

students in health related courses students in health related courses


NATIONAL TREATMENT LIMITATIONSNATIONAL TREATMENT LIMITATIONSMode 3 or Commercial Presence Mode 3 or Commercial Presence Provision of government subsidies and incentives to private hospProvision of government subsidies and incentives to private hospitalsitalsExtent of government subsidies given to foreignExtent of government subsidies given to foreign--owned or foreignowned or foreign--

controlled hospitalscontrolled hospitalsProvision of government support to private medical and nursing sProvision of government support to private medical and nursing schoolschoolsExtent of government support to foreignExtent of government support to foreign--owned or foreignowned or foreign--controlled controlled

medical schools and nursing schools medical schools and nursing schools Mode 4 or Movement of Natural Persons Mode 4 or Movement of Natural Persons Coverage of practice of foreign medical and health services Coverage of practice of foreign medical and health services Differentiated treatment of foreigners in health and medical praDifferentiated treatment of foreigners in health and medical practice ctice

10

Trade Negotiation IssuesTrade Negotiation IssuesWAYS OF ADDRESSING MARKET ACCESS WAYS OF ADDRESSING MARKET ACCESS LIMITATIONS IN VARIOUS MODES OF SUPPLYLIMITATIONS IN VARIOUS MODES OF SUPPLY

Mode I or Cross Border Transactions Mode I or Cross Border Transactions Openness to the liberalization of cross border transactions in hOpenness to the liberalization of cross border transactions in health ealth

and medical related activities and medical related activities

Mode 2 or Consumption Abroad Mode 2 or Consumption Abroad Lifting the restrictions on the number and duration of stay of fLifting the restrictions on the number and duration of stay of foreigners oreigners

seeking medical treatment in the countryseeking medical treatment in the countryLifting the limitations on the kind of ailments that foreign patLifting the limitations on the kind of ailments that foreign patients can ients can

seek medical treatment in the countryseek medical treatment in the countryLifting the limitations on the number of foreign students allowLifting the limitations on the number of foreign students allowed to ed to

enter and study in health related programsenter and study in health related programs

Trade Negotiation IssuesTrade Negotiation IssuesWAYS OF ADDRESSING MARKET ACCESS WAYS OF ADDRESSING MARKET ACCESS LIMITATIONS IN VARIOUS MODES OF SUPPLYLIMITATIONS IN VARIOUS MODES OF SUPPLY

Mode 3 or Commercial Presence Mode 3 or Commercial Presence Reducing or lifting the limitations on the number, and type of hReducing or lifting the limitations on the number, and type of hospitals, ospitals,

health clinics, and home for the aged that can be established byhealth clinics, and home for the aged that can be established byforeignersforeigners

Reducing or lifting the limitations on foreign equity participatReducing or lifting the limitations on foreign equity participation in the ion in the establishment of hospitals, medical and nursing schoolsestablishment of hospitals, medical and nursing schools

Mode 4 or Movement of Natural Persons Mode 4 or Movement of Natural Persons Reducing or lifting the restrictions on the number of foreign heReducing or lifting the restrictions on the number of foreign health alth

professionals allowed to practice in theprofessionals allowed to practice in theMeasures taken in the country to lift these limitationsMeasures taken in the country to lift these limitations

11

Trade Negotiation IssuesTrade Negotiation IssuesWAYS OF IMPROVING COMPETITIVENESS AND WAYS OF IMPROVING COMPETITIVENESS AND UPGRADING THE INDUSTRYUPGRADING THE INDUSTRY

Mode I or Cross Border Transactions Mode I or Cross Border Transactions Improve countryImprove country’’s telecommunications infrastructure to enhance the s telecommunications infrastructure to enhance the

cross border trade in health and medical servicescross border trade in health and medical servicesAvailability of trained human resources to carry out cross bordeAvailability of trained human resources to carry out cross border trade r trade

in health and medical servicesin health and medical servicesImprove the English language competency of countryImprove the English language competency of country’’s graduatess graduatesMode 2 or Consumption Abroad Mode 2 or Consumption Abroad International accreditation of hospitals to facilitate the portaInternational accreditation of hospitals to facilitate the portability of bility of

health insurance of foreign patientshealth insurance of foreign patientsIncrease the number of accredited hospitalsIncrease the number of accredited hospitalsInternational accreditation of medical and nursing schools International accreditation of medical and nursing schools Improvement of quality and standards of medical and nursing schoImprovement of quality and standards of medical and nursing schools ols

Trade Negotiation IssuesTrade Negotiation IssuesWAYS OF IMPROVING COMPETITIVENESS AND WAYS OF IMPROVING COMPETITIVENESS AND UPGRADING THE INDUSTRYUPGRADING THE INDUSTRY

Mode 3 or Commercial Presence Mode 3 or Commercial Presence Create an environment conducive to foreign investment in health Create an environment conducive to foreign investment in health and and

medical servicesmedical servicesAvailability of qualified health and medical professionals to atAvailability of qualified health and medical professionals to attract tract

foreign capital in the field of health services and medical and foreign capital in the field of health services and medical and nursing nursing education education

Mode 4 or Movement of Natural Persons Mode 4 or Movement of Natural Persons Attractive compensation package for health and medical professioAttractive compensation package for health and medical professionals nals

to attract foreign health and medical professionals to practice to attract foreign health and medical professionals to practice in the in the countrycountry

12

Trade Negotiation IssuesTrade Negotiation IssuesWAYS OF IMPROVING TRADE FACILITATION IN HEALTH WAYS OF IMPROVING TRADE FACILITATION IN HEALTH SERVICESSERVICES

Mode I or Cross Border Transactions Mode I or Cross Border Transactions Ease in the release the imported computers and telecommunicationEase in the release the imported computers and telecommunications s

equipment in the countryequipment in the country’’s customs bureaus customs bureau

Mode 2 or Consumption Abroad Mode 2 or Consumption Abroad Make immigration policies less restrictive in the entry of studeMake immigration policies less restrictive in the entry of students, nts,

patients, and touristspatients, and touristsMeasures undertaken to address portability of foreign health insMeasures undertaken to address portability of foreign health insurance urance

in your country in your country

Trade Negotiation IssuesTrade Negotiation IssuesWAYS OF IMPROVING TRADE FACILITATION IN WAYS OF IMPROVING TRADE FACILITATION IN HEALTH SERVICESHEALTH SERVICES

Mode 3 or Commercial Presence Mode 3 or Commercial Presence Assist hospitals in getting international accreditationAssist hospitals in getting international accreditation

Mode 4 or Movement of Natural Persons Mode 4 or Movement of Natural Persons Establish mutual recognition arrangements to facilitate the Establish mutual recognition arrangements to facilitate the

movement of natural persons in health servicesmovement of natural persons in health servicesParticipation in the discussions on the establishment of a Participation in the discussions on the establishment of a

mutual recognition arrangement (MRA) in the health mutual recognition arrangement (MRA) in the health sector in the ASEANsector in the ASEAN

13

Trade Negotiation IssuesTrade Negotiation IssuesSUGGESTED STRATEGY FOR TRADE NEGOTIATIONS WITH SUGGESTED STRATEGY FOR TRADE NEGOTIATIONS WITH JAPAN, CHINA AND KOREAJAPAN, CHINA AND KOREA

Push for the opening of the health sector in Japan and South Push for the opening of the health sector in Japan and South Korea. Korea. Conduct language and cultural training programs for ASEAN Conduct language and cultural training programs for ASEAN doctors, nurses and other health professionals to facilitate thedoctors, nurses and other health professionals to facilitate theentry to Japan and Koreaentry to Japan and KoreaPromote health tourismPromote health tourismEstablish retirement homes in ASEAN countriesEstablish retirement homes in ASEAN countriesAllow the temporary movement of health professionals in Allow the temporary movement of health professionals in countries with shortages of health professionalscountries with shortages of health professionals

Trade Negotiation IssuesTrade Negotiation IssuesDEVELOPMENT OF PROGRAMS IN ALTERNATIVE MEDICINEDEVELOPMENT OF PROGRAMS IN ALTERNATIVE MEDICINE

International accreditation of curricular International accreditation of curricular programs in medicine, nursing and other programs in medicine, nursing and other health professionshealth professionsWhat can ASEAN do in exploiting the regional What can ASEAN do in exploiting the regional health tourism route in enhancing regional health tourism route in enhancing regional economic integration?economic integration?

14

Trade Negotiation IssuesTrade Negotiation IssuesESTABLISH AN ASEAN+3 WIDE FRAMEWORK FOR ESTABLISH AN ASEAN+3 WIDE FRAMEWORK FOR PORTABILITY OF MEDICAL AND HEALTH INSURANCEPORTABILITY OF MEDICAL AND HEALTH INSURANCE

More liberal immigration policies pertaining to the stay of patiMore liberal immigration policies pertaining to the stay of patients ents seeking treatment overseasseeking treatment overseasDevelopment of ASEAN+3 visa for health tourism and temporary Development of ASEAN+3 visa for health tourism and temporary movement of health professionals in the regionmovement of health professionals in the regionAccreditation of hospital and medical centersAccreditation of hospital and medical centersPromote ASEAN+3 as haven for sophisticated type medical Promote ASEAN+3 as haven for sophisticated type medical treatment and exotic alternative medicine treatment and exotic alternative medicine Development of rules of rules on the privacy and confidentialityDevelopment of rules of rules on the privacy and confidentialityof patientof patient

Trade Negotiation IssuesTrade Negotiation IssuesTRAINING AND TRANSFER OF SKILLS TOWARDS TRAINING AND TRANSFER OF SKILLS TOWARDS THE HARMONIZATION OF STANDARDS IN THE THE HARMONIZATION OF STANDARDS IN THE PRACTICE OF VARIOUS HEALTH PROFESSIONS PRACTICE OF VARIOUS HEALTH PROFESSIONS AND IN MEDICAL AND HEALTH EDUCATION AND IN MEDICAL AND HEALTH EDUCATION TOWARDS THE ESTABLISHMENT OF MRA IN TOWARDS THE ESTABLISHMENT OF MRA IN HEALTHHEALTH

Assist countries in the development of regulatory Assist countries in the development of regulatory boards in health professions boards in health professions Facilitate the accreditation of hospitals and medical Facilitate the accreditation of hospitals and medical and nursing schoolsand nursing schoolsDevelopment of a regulatory framework for alternative Development of a regulatory framework for alternative medicinemedicine

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WHAT TECHNICAL ASSISTANCE MEASURES CAN WHAT TECHNICAL ASSISTANCE MEASURES CAN BE EXTENDED BY DEVELOPED COUNTRIES IN THE BE EXTENDED BY DEVELOPED COUNTRIES IN THE REGION TO FACILITATE TRADE IN HEALTH REGION TO FACILITATE TRADE IN HEALTH SERVICES?SERVICES?

Assist developing countries improve their medical Assist developing countries improve their medical and nursing curricular programs to meet international and nursing curricular programs to meet international standardsstandardsLanguage training for foreign health professionals Language training for foreign health professionals seeking employment overseas or in the region.seeking employment overseas or in the region.


Highlights of Technical WorkshopHighlights of Technical Workshop

Variability of Professional FeesVariability of Professional FeesWeakness of RP medical sector in exploiting Weakness of RP medical sector in exploiting medical tourismmedical tourismCan make RP medical services uncompetitiveCan make RP medical services uncompetitiveBasis for nonBasis for non--accreditation of doctorsaccreditation of doctorsNeed to convince hospital administrators and Need to convince hospital administrators and

medical practitioners on the benefits of medical practitioners on the benefits of regional trade in health services regional trade in health services

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Framework for trade negotiationFramework for trade negotiationBased on existing differences in regulatory Based on existing differences in regulatory frameworksframeworksNeed to address regulatory heterogeneity by Need to address regulatory heterogeneity by liberalizing limitations on market access, liberalizing limitations on market access, national treatment and domestic regulationnational treatment and domestic regulationMake health sector market friendly to Make health sector market friendly to domestic and foreign consumers and domestic and foreign consumers and suppliers within the region suppliers within the region


Basis for intraBasis for intra--regional trade in serviceregional trade in serviceBased on the relative strengths of the countryBased on the relative strengths of the countryASEAN should promote the role of market ASEAN should promote the role of market forces in enhancing trade in medical and forces in enhancing trade in medical and health serviceshealth servicesProvision of technical assistance to other Provision of technical assistance to other countries to improve their environment for countries to improve their environment for market friendly policies market friendly policies

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Best practices in enhancing regional trade Best practices in enhancing regional trade in health servicesin health services

Hasten the international accreditation of Hasten the international accreditation of hospitalshospitalsExpand intraExpand intra--ASEAN trade based on relative ASEAN trade based on relative strengths of countriesstrengths of countriesWork towards portability of health and medical Work towards portability of health and medical insuranceinsuranceHarmonization of pharmaceutical productsHarmonization of pharmaceutical products

Development of a private sector framework for ASEAN trade

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Transcript of Development of a private sector framework for ASEAN trade